Joni Mitchell wrote the song from what she had heard from then-boyfriend, Graham Nash, about the Woodstock Music and Art Festival. She had not been there herself, since she was told by a manager that it would be more advantageous for her to appear on The Dick Cavett Show. She wrote it in a hotel room in New York City, watching televised reports of the festival. "The deprivation of not being able to go provided me with an intense angle on Woodstock," she told an interviewer shortly after the event.
The lyrics tell a story about a spiritual journey to Max Yasgur's farm, the place of the festival, and making prominent use of religious imagery, comparing the festival place with the Garden of Eden ("...and we've got to get ourselves back to the garden"). The saga commences with the narrator's encounter of a fellow traveler ("Well, I came upon a child of God, he was walking along the road") and concludes at their ultimate destination ("by the time we got to Woodstock, we were half a million strong..."). There are also references to the Vietnam War ("bombers flying shotgun in the sky").
Prior to release on any album, Mitchell performed "Woodstock" at the 1969 Big Sur Folk Festival, one month after Woodstock. The solo performance can be seen in the festival concert film Celebration at Big Sur (released in 1971). Mitchell had not yet developed her distaste for large festival gigs.
About the same time that Ladies of the Canyon appeared, Crosby, Stills, Nash & Young's upbeat hard rock arrangement was released as a single and on their Déjà Vu album. Theirs is the more well-known version of the song, having reached #11 on the Billboard Hot 100. This recording opens with a distinct, memorable lead guitar lick played by Stephen Stills. Stills also sings lead vocals in addition with backing harmonies from David Crosby and Graham Nash. This arrangement is also notable for the start-stop patterns just prior to the "We are stardust, we are golden..." chorus. Also in March 1970, the Woodstock film was released with a different take by CSN&Y over the closing credits.
The Assembled Multitude's 1970 instrumental version reached #79 in the US. David Crosby, in an interview in the documentary Joni Mitchell: Woman of Heart and Mind, said that Mitchell had captured the feeling and importance of the Woodstock festival better than anyone who had been there.
A line from the chorus, "We are billion year old carbon," was used by Corey Mesler as the title of a novel about the 1960s.
In an episode of the fictional US political television drama, The West Wing, "The Warfare of Genghis Khan" (Series 5, Episode 13), a NASA Assistant Administrator, Alex Moreau, shows the Orion Nebula to Josh Lyman through a telescope and describes it to him, explaining that "Everything, every atom in our bodies, comes from exploding stars" and concluding "I guess Joni Mitchell was right: 'We are stardust'".
The 20th episode of Six Feet Under, "Back to the Garden", takes its title from the song's lyrics, and features it prominently in the episode, including a closing scene in which Frances Conroy, in a broken voice, sings along with the song as it plays from a cassette tape.
British punk group Chumbawamba referenced a lyric in their song "I'm Not Sorry, I Was Having Fun." The lyric "By the time we got to Woodstock, we were half a million strong" became "By the time I got to Woodstock, it was going up in flames," referring to the disastrous Woodstock 1999 festival.